LANSING, Mich. — Management of Detroit’s finances and future remained in the control of the mayor and the elected City Council late Wednesday after city leaders and Michigan Gov. Rick Snyder’s review team came to a power-sharing deal on a path forward to fix the broken city.
The consent agreement, approved after much angst among city residents and union workers and amid heated debate among city leaders, was approved by a 5-4 vote of the City Council, staving off use of the state’s emergency financial manager law, which would have ceded control to an outside authority.
Under the new deal, approved as a Thursday deadline with the state loomed, Mayor Dave Bing and the council would retain control over its finances and budget, but financial restructuring would be overseen by a nine-member panel appointed by the state that would monitor its progress.
The city would also be forced to renegotiate contracts with its many unions and share any decisions moving forward with a newly hired project manager and chief financial officer.
Mr. Snyder, a Republican, said all along in tense negotiation that he did not want to put an emergency financial manager in charge of the city. But he was firm in his position that he would not hesitate to take control to protect residents and city services.
Wednesday night, he praised the work of the city’s leaders in coming to a reasonable agreement to fix the city’s myriad financial woes, though he added that much work remains to put the Motor City’s finances back in order, to balance budgets and to put a solid foundation for future business growth in place. He urged continued cooperation within the city on behalf of Detroit’s long-term interests.
“The council has acted responsibly to put Detroit on the path to financial stability,” Mr. Snyder said in a statement. “We all want Detroit to succeed … The magnitude of the city’s financial challenges means that many difficult decisions lie ahead. We must build on this spirit of cooperation and be willing to act in the city’s long-term interests.”
The decision came on a close vote from a divided City Council as Mr. Bing remained hospitalized with colon problems. Those who approved the consent deal were council President Charles Pugh, President Pro Tem Gary Brown along with council members Saunteel Jenkins, Kenneth Cockrel Jr. and James Tate. Council members Brenda Jones, Andre Spivey, JoAnn Watson, Kwame Kenyatta voted no.
Mr. Bing’s deputy mayor, Kirk Lewis, praised the work of his council as they struggled with tough issues facing Detroit.
“The Detroit City Council’s vote tonight represents a pivotal moment in Detroit’s history,” Mr. Lewis said in a statement. “It is time now to begin the monumental task of stabilizing Detroit’s financial operations, which is and has always been the mission of Mayor Bing and his administration.”
Mr. Tate described the deal in a statement as “the least destructive alternative” to an emergency financial manager, which many city residents spoke out angrily against.
The Detroit case is the highest-profile case yet involving a year-old Michigan law that gives the state more power to intervene in financially troubled cities and school systems.
Emergency managers have the power to toss out union contracts and strip locally elected leaders of authority. A petition drive aimed at overturning the Michigan law is trying to qualify for the November ballot.
Detroit faces a $200 million deficit and $13.2 billion in long-term structural debt. Council recently approved the sale of $137 million in bonds to help solve Detroit’s immediate cash flow issues and avoid possible payless paydays.
The agreement calls for the mayor to not “execute” and the council to “not approve” any changes to current collective bargaining agreements. Mr. Bing had used the threat of an emergency manager to get the unions to come to the table. Under Public Act 4, an emergency manager would have the authority to rip up and renegotiate union contracts.
However, some were still calling the deal a disenfranchising sell-out that strips the city’s democratically elected government of its powers.
“This vote was horrible. Who gives away control?” Cecily McClellan, who works in the Detroit Human Services department, told AP. “They have the authority to union bust. This has been a steadfast dismantling of the city and this is the final straw.”
• This article was based in part on wire-service reports.